Qatar’s fiscal deficit is expected to fall below 1% and narrow to 0.4% of the country’s GDP this year from an estimated 2.3% of GDP in 2020, The Economist Intelligence Unit (EIU) said in its latest update.
An expected shift from a deficit on Qatar’s current account to a surplus is seen in 2021, EIU said.
Qatari riyal's peg to the US dollar will continue to be backed by healthy foreign reserves and QIA assets.
The end of the GCC crisis has “considerably lessened” economic risk stemming from regional disputes, EIU said and noted the sovereign risk rating has been “upgraded” to ‘BBB’, EIU said.
According to EIU, Qatar's ability to “fully service” its significant debt obligations remains strong, supported by “ample” foreign reserves and the “assets” of the Qatar Investment Authority (QIA, the sovereign wealth fund).
EIU has given a rating of ‘BB’ on the banking sector risk and noted it is supported by a “robust” regulatory framework and solid capital and liquidity indicators. The ratio of non-performing loans to total loans has historically been low, but is likely to rise in the short term.
In the short term, the economic policy will continue focusing on addressing the fallout from the pandemic and subdued global oil prices. Qatar's stock of public debt weighs on the outlook, but a “sound” financial system is supportive.
Earlier, EIU noted the country’s real economic growth will remain stable throughout most of the long-term forecast period. However, economic diversification investment projects will “sustain robust growth” until 2030, after which growth will start to edge down.
“There remains potential for bursts of high growth if further gas export projects, beyond those planned for the mid-2020s are approved by the government. Diversification and the expansion of the services sector, funded by the State's hydrocarbons wealth, will also provide opportunities for growth,” EIU said.